Digital currencies are ‘here to stay’ – ECB realises their powerful existence

Digital currencies are ‘here to stay’ – ECB realises their powerful existence

Bitcoin, Zerocoin, Zcash, Monero… In a nutshell, altcoins. Is it all “Greek” to you? Probably you should not feel alone as, even economy and finance experts are still trying to decode these and nearly one thousand more cryptocurrencies that exist and are said to be used globally.

The actual power of cryptocurrencies has changed the way people in the economic sphere see things. People who have been used to deal with centralised banking very recently opened their ears and heard the heavy sound of non-fiat money and accepted the fact that, digital, alternative or virtual currencies are ”here to stay”, as the Federal Reserve Bank of Dallas President Robert Kaplan said in Frankfurt, on Thursday, urging authorities “to become more familiar with them”, according to a relevant Luxembourg Times’ article on the subject.

The G20 meeting in March

Financial experts say a lot will depend on what the G20 meeting of this year, about to take place in Argentina, in March will result in. Among others topics on their agenda, heads of governments or heads of state, Finance & Foreign Affairs ministers and central bank chiefs (EC – ECB being the 20th member representing the EU) will debate the best possible co-existence of centralised and decentralised currencies.

Right now, what counts the most is lawfulness of the system cryptocurrencies are based on and function, plus if and how they could assimilate into the traditional money “community”.

The European Central Bank (ECB) and its demand

Understanding the full spectrum of possible risks cryptocurrencies come along with, Former Luxembourg central bank governor and ECB executive board member Yves Mersch, now demands to know more about the transactions. He and, by extension, the ECB would also like to be able to control this new “asset class”.

”If you increasingly have bridges between the virtual world and the real world and then there is a collapse in this virtual world, it could drain liquidity from the real world. This then becomes a concern for the central bank.

Photo: Yves Mersch

We need more information. For me, one obligation would already be to force the unregulated platforms to report transactions in a harmonised way to repositories so that we would have access to information – also in order to create a better response”, is what Mersch noted during a Frankfurt interview of his.

The moment when most policy makers around the world saw their stage being taken over by other actors, meaning they would have to gain it back was at the end of 2017.

“That changed when investors piled into Bitcoin and its peers toward the end of last year, creating more than $684 billion (€558 billion) in paper wealth in just three months, before prices tumbled in 2018”, report…/IBNA